How to Buy Good Inexpensive Wine

Why does one wine cost $6 and another $60? Many variables go into the price.

Land is one factor. If the land has been handed down for generations or is located in a less expensive region like South America, it won't add much to the price. But, if the grapes are grown on soil in Napa Valley, where land can cost $300,000 an acre, it will make a difference.

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The way in which the grapes are harvested is another factor. Grapes harvested by machine are lower cost than those gathered by hand. Of course, grapes grown by prestigious growers are pricier than those raised in low-overhead areas. The difference can be $6,000 a ton versus $1,000 a ton.

Winemakers use expensive equipment including crushers, forklifts, tanks, pumps and chillers. They all add to the cost. So do new oak barrels, ranging from $400 for an American oak to $1,000 for a French barrel.

Then there are the bottles and closures. A cheap bottle costs 65 cents and a thicker glass about $2. At around 5 cents, synthetic corks are the least expensive closer. The cork-cage-foil combo you find on a Champagne bottle is the most costly, running about $1.

Label design and the label itself add expense. How much depends on the type of paper and design elements like engraving and embossing.

Marketing, transport, taxes and tariffs add cost, as do distributor and retailer markups.

But, what finally determines the cost of a bottle of wine is the price the winery sets. Reviews, collectability, scarcity, fashion and demand all play a part.

What Got Yellow Tail Jumping

In the 1960s, the Australian government began building dams in order to change the country's dry, rocky, desert terrain into green farmland. In 1993, Australian farmers got a tax shelter that allowed them to write off the expense of buying and planting grape vines over four years. The result was a doubling of Australia's wine planting between 1997 and 2001. At the same time, the Australian dollar sank. So when the vines started yielding crops, the mega-producers in Australia with state-of-the-art winemaking facilities were able to flood the United States and United Kingdom with inexpensive wine. In 2007, much of the $3 billion in wine exported by Australia was Yellow Tail. The cute kangaroo on the bottle must have helped.